The Project Group, operated by principals John Zayac and Michael Tuan Bustamante, has been under contract for the past 18 years to monitor public utility issues for the Cleveland City Council. But the consultants did not report on several controversies related to utilities until after The Plain Dealer exposed them. Some examples.:

Meigs County coal plant

In 2008, city council hired ION Consulting, a Denver-based firm to evaluate Cleveland Public Power’s plans to enter a long-term contract with American Municipal Power to build a coal-fired power plant in Meigs County, Ohio.

ION’s report told council that intensified community opposition and environmental concerns, increases in construction costs and ever-changing technologies to control harmful emissions had made coal-fired power plants a dicey venture for most public utilities.

ION went on to forewarn that lenders will finance such a risky project only if the participating communities and utilities sign long-term power purchase agreements that require them to pay, whether or not they receive the low-cost power they bargained for.

Despite the warnings, CPP agreed to the “take or pay” contract.

And as ION prophesied, after several years of protests from environmentalists and a spike in the price of the project to nearly $4 billion, AMP aborted the Meigs County coal plant altogether in 2009.

Cleveland was responsible for $13 million in “stranded costs” to cover plans for a plant that was never built. Agreeing to participate in another AMP-driven deal to build a natural gas plant in Fremont whittled that cost to about $8 million, which would be split between customers and a construction-debt fund.

The Project Group’s monthly reports did not mention the Meigs County debacle until mid-2010, when the Fremont deal was in the works.

John Zayac, one of the principals for The Project Group, said in a recent interview that Matt Zone, then-Chairman of Council’s Public Utilities Committee, had sent him to southern Ohio for an AMP conference on the project. Zayac said the project seemed disorganized and left him feeling uneasy. He said that he relayed his feelings to Zone but was never asked to follow up with additional research.

“Eventually, it died a slow death,” Zayac said.

Zone said in a recent interview that he did not request further follow-up from The Project Group because he was relying on the advice from ION instead. He said that his interpretation of the ION report was that the take-or-pay contract was a risky proposition but that it made sense to buy power at a fixed cost, given the unpredictability of the market.

“No offense to The Project Group,” Zone said. “But we needed a specialized consultant to do that work.”

The Prairie State Energy Campus

Problems with another coal-burning power plant, this one in Illinois, also did not appear in The Project Group’s reports until after a Plain Dealer story detailed the issue in September 2012.

In that case, CPP’s long-term contract through AMP resulted in the utility’s customers paying a rate that was 42 percent higher than market for the first year of operation. Other problems identified could cause rates to spike for years to come.

But The Project Group did not weigh in on the matter until after the story ran in the newspaper, and then only summarized the article. In a later report, the consultants noted that they had spoken with Marc Gerken, the president of AMP, who assured them that although the cost of energy from the plant is high, “this cost is consistent with projections that were developed when CPP chose to invest in the project.”

Zayac said in a recent interview that he did not follow up with additional research on the project because council did not request it.

Waste-to-energy plant

The Project Group also did not perform any independent research on Mayor Frank Jackson’s controversial plan to build a waste-to-energy plant in the city or issue an opinion on the city’s no-bid contract with now-fired consultant Peter Tien.

In Special Report #50, dated Aug. 2, 2009, the consultants summarized a feasibility study conducted by RNR Consulting and recapped the details of Tien’s 2007 proposal to manage the project and air emission permit application process.

But by September 2013, after years of public controversy and protest over pollution concerns, Tien had been fired for failing to perform to the city’s standards, and the city announced that it would pull the plug on the waste-to-energy plan altogether in favor of other trash management strategies.

In a recent email, Zayac outlined his involvement in vetting the project, which included attending community meetings, administrative briefings and touring the city’s Ridge Road garbage transfer station. The firm also recommended that council retain an expert to consult on the issue.

Zayac said that he began to doubt Tien after visiting his Akron headquarters in a small, nondescript building, and that his doubts eventually were proven accurate.

Sunpu-Opto Semiconductor Ltd.

The Project Group also did not advise council on another Tien-inspired venture involving a no-bid contract to purchase LED lights from the Chinese company Sunpu-Opto Semiconductor Ltd.

Controversy over the lack of competitive bidding eventually killed the deal, but not before council voted to approve the no-bid contract -- without legislative guidance from The Project Group.

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